This week’s report is a day late and shorter than normal for a fairly good reason. Saturday I was hiking with my wife near Lake Mead in Nevada. I fell and broke my ankle coming down a treacherous slope covered with loose rocks and gravel.

I am fortunate because the injury could have been much more serious. Over the next several weeks my condition will be annoying and painful, but not critical.

Current market conditions are similar. Once again we’ve had a week of market activity that has been frustrating, but not critically damaging. Although major indices are still below their earlier levels, they appear to be setting a pattern of higher lows—a positive technical sign.

Perhaps the biggest wild card with the most potential to derail the markets now is the situation in Iran. Declining home values, falling GDP, and rising inflation can all cause problems for U.S. stocks. But if Britain takes military action against Iran to free its hostage sailors we could expect to see the world financial markets unravel in a hurry. It would be very easy for such a situation to escalate into all out war in which the U.S. would also become involved.

The price of oil has been rising and heightened tensions in the Middle East would send those prices skyrocketing again.

So keep your fingers crossed and hope that this situation can be resolved diplomatically.

Have a great weekend.

F.S.